In July, the product balance was in the red for the first time in 10 years and 3 months… Reduction of current account surplus

Current account maintains surplus for three months
Raw material imports surged 35.5% from the previous year

photo = Yonhap News

Although the current account recorded a surplus for three consecutive months in July, the commodity account turned to a loss for the first time in 10 years and 3 months due to a rise in raw material import prices.

According to the interim balance of payments statistics released by the Bank of Korea on the 7th, the current account surplus recorded a surplus of 1.09 billion dollars (regarding 1.5 trillion won) in July. After the successful transition to surplus in May, the surplus continued for three months, but the surplus was $6.62 billion less than the same month last year ($7.71 billion).

By item, the goods account surplus fell by $6.73 billion from the previous year, resulting in a loss of $1.18 billion. The trade deficit was the first in 10 years and 3 months since April 2012.

Exports (US$59.05 billion) increased 6.9% (US$3.79 billion), but imports (US$60.23 billion) increased 21.2% (US$1.0.52 billion). It is noteworthy that imports of raw materials as of the customs clearance in July soared 35.5% from the same month last year. Among raw materials, imports of coal, oil and gas (customs clearance) increased by 110.0%, 99.3%, and 58.9%, respectively. In addition, imports of capital goods such as semiconductors (23.8%) increased by 7.6%, and imports of consumer goods including grains (28.2%) and home appliances (21.3%) increased by 8.5%.

The service account recorded a surplus of $340 million. This is an increase of $620 million from July last year ($280 million). Of the service account, the transportation surplus surged to $1.84 billion from $1.48 billion in the previous year. Export freight rates remained at a high level.

The travel account deficit ($860 million) increased from the same month last year ($500 million). The primary income surplus ($2.27 billion) decreased by $580 million compared to last year ($2.84 billion). Financial account net assets (assets-liabilities) increased by 180 million dollars. In the case of direct investment, foreign investment by Koreans increased by $5.67 billion, and domestic investment by foreigners increased by $2.26 billion.

Reporter Chae Seon-hee, Hankyung.com [e-mail]